Governor: GRT or deep cuts

Friday

May 11, 2007 at 12:01 AMMay 11, 2007 at 11:02 AM

Blagojevich says he'd veto any other tax legislation

Doug Finke

Trying to win passage of his gross-receipts tax in the Illinois House, Gov. Rod Blagojevich personally told representatives Wednesday that dire budget cuts will result from no tax increase and that he will not accept higher income or sales taxes.

His argument may have failed.

House Speaker Michael Madigan, D-Chicago, said he will ask the House to vote today on whether it wants to impose a tax on the receipts of businesses with revenues of $2 million or more. If most of the 118 House members vote against the tax, it will be a serious blow to Blagojevich.

"When the resolution comes up, I would expect close to 100 votes (against the tax)," said Rep. Frank Mautino, D-Spring Valley.

The Democratic governor, making a rare trip to Springfield, appeared before a committee of the whole hearing of the House called by Madigan to debate the gross-receipts tax, pro and con. Over nearly two hours, Blagojevich told representatives they have three choices: approve his GRT, raise the income tax or sales tax or both, or pass a budget without additional revenue.

He immediately took one option off the table.

"I oppose an income or sales tax (hike)," Blagojevich said. "I will not raise taxes on people. I won't do it today. I won't do it tomorrow. I won't do it next week, next month, next year. This is not an issue I'm prepared to horse trade. That option does not exist."

Blagojevich said passing a budget for the fiscal year that begins July 1 with no tax increase is equally unacceptable because it will mean program cuts to cover other expenses.

"It means devastating cuts in programs your constituents care about," Blagojevich warned. "It means cuts in education, cuts in health care and in police protection. It means cuts in funding for roads and bridges. Hot meals for senior citizens in Carbondale will have to be cut. Job training to workers in Galesburg will have to be cut. A do-nothing budget means pain to your constituents."

Blagojevich said that leaves the GRT, estimated to raise about $7.6 billion by taxing most transactions of Illinois' largest businesses. He said he is willing to work with lawmakers to tweak the tax and make it more palatable to them.

But even members of his own party took the governor to task for his approach.

"You said you are here to compromise, but you will only talk about one thing," Rep. Lou Lang, D-Chicago, said to loud applause from other lawmakers.

"There's something inexplicable about expressing a willingness to work with us while stating that anything else will be vetoed," said Rep. John Fritchey, D-Chicago. "Nobody here is interested in a showdown."

But that's where the House appears to be heading. Already, 61 representatives - all 52 Republicans and nine Democrats - have signed onto a resolution opposing the GRT. Many more are expected to show their opposition today.

"If he digs his feet in and the vote is what I suspect it will be, it doesn't bode well for getting a resolution to the budget," Smith said. "It sets the state for a long, long haul."

However, House Republican Leader Tom Cross of Oswego said resounding rejection of the GRT could move negotiations along.

"You can sit here and talk and talk and pontificate and posture," said Cross, who also believes the House will vote against the tax. "I think it's good for everybody to know that it's either alive or dead, and we move forward."

The House spent nearly eight hours Wednesday hearing from witness after witness about the gross-receipts tax. Immediately after Blagojevich finished, Lt. Gov. Pat Quinn testified against the tax, which he said will be passed on to consumers.

"Ben Franklin said two things are inevitable - death and taxes," Quinn said. "Ben Franklin did not say it is inevitable to be taxed to death. It is a soak-the-middle-class tax."

Labor unions, including the American Federation of State, County and Municipal Employees, spoke in favor of the tax. AFSCME argued it will allow the state to hire badly needed workers to provide state services, although Blagojevich has said he does not want to add to the state payroll.

Representatives of teachers unions said the GRT will provide a reliable source of funding for schools that will help lessen the need for higher property taxes. Some property tax relief is part of the GRT plan.

Business interests repeated their assertion that the tax will drive many businesses out of the state, cause others to close and force the rest to raise prices.

Lost jobs will also result, they argued.

"I'm not sure any of us are going to have our minds changed," said Rep. Raymond Poe, R-Springfield, as the hearing droned on. "We could probably have predicted how everybody was going to testify, for and against."